U.S. needs choose to exclude key AT&T argument in Time Warner merger trial

WASHINGTON (Reuters) – The U.S. Justice Division needs a choose to bar AT&T Inc (T.N) from utilizing a voluntary dedication it made on licensing content material as a part of its protection when an antitrust trial begins subsequent week over the destiny of the corporate’s deliberate $85 billion merger with Time Warner Inc (TWX.N), court docket paperwork present.

The Justice Division filed a lawsuit in November to cease AT&T, which owns DirecTV and different merchandise with 25 million subscribers, from shopping for film and TV present maker Time Warner, which owns HBO and CNN, amongst many different channels. A trial is about to start out on Monday.

The federal government argues the merger would hike pay TV subscribers payments by $zero.45 a month, citing an knowledgeable evaluation.

AT&T contends that evaluation is fatally flawed as a result of it doesn’t embody its dedication for seven years to conform to binding arbitration over disputes with distributors like DISH Community Corp (DISH.O) or Comcast Corp (CMCSA.O) over licensing phrases.

The dedication, AT&T and Time Warner mentioned in a authorized submitting launched on Tuesday, “is a concrete assurance that this merger has by no means been about elevating the value of Turner content material.”

Time Warner’s Turner owns CNN, TBS, TNT and different networks that air information, sports activities and different programming. Final 12 months, the federal government demanded AT&T conform to divest Turner as one supply to approve the merger.

The Justice Division mentioned in a separate submitting that the AT&T dedication was a “unilateral promise” that was not related as to whether the transaction lessens competitors. The federal government argues together with the difficulty would “waste the court docket’s restricted time and confuse the proceedings.”

AT&T requested U.S. District Choose Richard Leon to reject the request. John Stankey, the top of AT&T’s leisure group who is about to go the mixed firm’s media enterprise, mentioned in a deposition that the corporate wouldn’t withdraw the dedication.

Leon is holding a closed-door pretrial convention with attorneys for each side on Tuesday.

If Leon finds the transaction would hurt competitors, he might take into account the dedication when he considers treatments, the Justice Division mentioned.

The federal government’s evaluation assumed the mixed AT&T Time Warner would have “bargaining leverage” that it might use to compel distributors to pay larger costs for Turner networks, citing a mannequin by an economist, AT&T mentioned.

The Justice Division mentioned 20 of 1,000 distributors had agreed to the arbitration supply made in November. AT&T mentioned it modeled the dedication on a provision of the phrases of the Comcast acquisition of NBCUniversal.

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